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BASELWORLD 2018 (p. 3) TWELVE DISRUPTIONS (p. 20-29)

WATCH.AFICIONADO

A EUROPA STAR GROUP PUBLICATION

EDITORIAL

The resilience of the watch industry

By Pierre Maillard

Since 1927, the year it was founded, Europa Star has been on the front line, watching, commentating, analysing and experiencing all of the “watch industry crises” as they have unfolded.

In reality, however, the watch industry has done no more than mirror, more or less, international and local crises. Our first major drama arrived quite quickly, in 1929. We had witnessed the shutting down of the Russian market in 1917, the rising tide of protectionism, hyperinflation in Germany, and everything came to a head.

“The decline in watch exports as of the end of 1929 brought about dramatic levels of unemployment. Of the 24,791 registered workers in the canton of Neuchâtel, 14,258 are unemployed. 6,634 of these are completely jobless and 7,418 are employed parttime, with 206 employed to work by the authorities,” states a newspaper report of the time.

Ten years later, the Second World War erupted, and threw everything up in the air once again. But the watch industry managed to adjust and, paradoxically, did well out of it.

Between 1939 and 1942 alone, exports grew from 196 million to 284 million. After the war, the industry reorganised from top to bottom, began regulating itself, regrouped and re-established its dominance.

Then quartz came along, leaving destruction in its wake. It was even worse than 1929. There’s no point rehashing that episode, we all know the story. Between 1970 and 1976, the number of people employed by the watch industry plummeted by nearly 40%. But there again, the situation was consistent with what was happening elsewhere. At the time, Japan was the rising model economy.

A glance through the advertisements in our magazine confirms that what followed was a “glam-quartz” period of mass-market watches that were colourful, playful and disposable. That lasted more or less until mechanical watchmaking moved back into centre stage, where it now reigns absolute.

This upward curve was by no means smooth; there were peaks and troughs of varying magnitudes, “corrections” attributable to episodes of market madness (faithfully mirrored in the watch industry, let there be no mistake). But whatever anyone says, these periods of turbulence were absorbed relatively painlessly: the watch market grew from 10.3 billion Swiss francs in exports in 2009 to a high of 21.5 billion in 2015, retreating slightly to just under 20 billion in 2017. So, on the whole, so far so good, as they say.

The watch industry has always proved to be resilient, opportunistic where necessary, and capable of embracing change.

So why does there seem to be this strange looming sense of anxiety, disquiet, uncertainty? Smartwatches threw a spanner in the works, marketing strategies are no longer really working, fly-by-night startups are sprouting like mushrooms, tastes are changing, one e-commerce site holds invaluable data on one million actual watch buyers, movements made entirely by machine are certified by the COSC, new materials with incredible properties are being invented, vintage is everywhere, XXL watches are now considered vulgar (about time too...). Everything is up in the air.

It’s all one big tangle – digital revolution, social media, connection, ecommerce, globalisation, protectionism... all carried on a wave of words from hordes of bloggers, instagrammers, influencers, social media pirates, experts and professional speakers. Not forgetting humble journalists. The watch industry, which tries so hard to control everything – production upstream, distribution downstream and communication at all points in between – is once again watching the cracks appear in its carefully built edifice.

There are many uncertainties. Old structures are breaking down. But equally, new paths are opening up.

Did someone mention “resilience”?

In this issue, we open the special dossier "Twelve Disruptions" that looks at these upheavals.

The full dossier is available on Europa Star Global edition or on www.europastar.com.

WATCH BUSINESS PAPER | USA VOL. 54 NO. 303 | CHAPTER 2/2018 | WWW.EUROPASTAR.COM

Patek Philippe Ladies’ Chronograph

The latest in a long line of watch complications for women. (on page 4)

Distinct and decisive, handmade in Germany—the new watch Autobahn: racing ahead with Glashütte engineering and handcraft.

Autobahn is now available in three versions with selected retailers across North America, including Bhindi Jewelers; Borsheims; Brinker’s Jewelers; Brown & Co. Jewelers; Chatel; Diamond Cellar; Fox’s; JB Hudson Jewelers; J. Vair Anderson; L. Majors; London Jewelers; L’Oro; Oster Jewelers; Roldorf; Shreve & Co.; Shreve, Crump & Low; Swiss Fine Timing; Timeless Luxury Watches; Tourneau; Wempe Jewelers; Windsor Jewelers. And here: nomos-watches.com

BASELWORLD 2018

WATCH AFICIONADO | 3

Reproduction on watercolour (1806) of the Dance of the Death of Basel, painted in 1440.

Basel-bashing Let's stop being dramatic. "Basel-bashing" has reached an all-time high. In this digital age, all watch trade fairs must change their operational procedure. So should the media. And the brands themselves. What's wrong with that?

By Serge Maillard

Is there a doctor in the house to save Baselworld? In the last two years – basically since digital technology made its big break into watchmaking, which coincided with the Chinese crisis – what remains the most important trade fair in the watchmaking world has been attacked from all sides. The event appears to be entrenched in denial, discrepancy and decrepitude.

Since the beginning of the year, journalists have been receiving interviews (or rather press releases) from the organisation, featuring heads of companies advocating the importance of the trade fair. But rather than driving home a positive image,

the vacuous propagandist side of the operation has actually hammered yet another nail into its coffin. Pulling heavy strings or stomping around is not going to win over the hearts of luxury aficionados in this era of accountability, irony and weariness with regard to political correctness.

That being said, I wish to defend Baselworld... despite the considerable arrogance shown by the organisation, the corollary of the monopolistic security that it has enjoyed for so long; despite the "cold" shareholder's approach on the part of an event that should be a "hot ticket" on the watchmaking calendar: a reason to gather together, a true need in this age when everything happens at a distance. An approach that is so dif-

ferent from that of the team of the Fondation de la Haute Horlogerie, the competitor with the wind in its sails: affordable, irreverent and professional.

And, last but not least, despite the soaring price of participation in the event, a holdover from another time that reveals how much our consumption habits have changed, and a cruel demonstration of how Baselworld is living on another planet... Let's face it: all over the building, cracks are appearing. Taxis with explosive fares are faced with Uber. Hotels with prohibitive rates? Airbnb. Restaurants charging three times what a meal is worth? TripAdvisor. Expensive, conformist booths? Extramural concept stores.

The accumulated frustration is such that the reaction is all the more disproportionate. Baselworld is said to be "finished": threatened with a definitive shutdown, completely outdated.

But let's drop the drama. To start with, let's forget the supposed threat that the event will disappear altogether – at least not in the next two years (according to our information on commitments made by the most important exhibitors). Let's give them the benefit of the doubt, a chance to claw their way back.

But a reaction should indeed make

itself felt. Because the profession still needs a moment of catharsis.

Symbiosis. Handshakes all around.

Effervescence. But in a different way.

As long as it still has a spine – made up of the Swatch Group, LVMH, Rolex, Patek Philippe and various Japanese brands, among others – the trade fair will continue to attract at least a few hundred players from the watchmaking world, if not the few thousand that it used to bring in.

That being said, I wish to defend Baselworld... a reason to gather together, a true need in this age when everything happens at a distance.

The central core is there, and it continues to actively support the event, if only in the form of lip service.

But renting out overpriced booths is no longer enough. The emissaries of Baselworld have probably travelled the world in search of the best practices in watchmaking trade fairs. Let's hope that they have noted the example of Dubai Watch Week, which in turn appears to have inspired the SIHH and its new

American counterpart, Watches & Wonders. These events offer a true programme of round tables and straight-shooting conferences; they include vintage watches so sought after by the famous millennials; they feature interactive spaces (not limited to the Samsung booth); and more.

In a word, they focus on the cultural, in the sense of what makes watchmaking culture so attractive for millions of people across the world, to facilitate the commercial. Instead of simply glossing over what is clearly organisational and financial stress.

Change should be felt in our guts!

We at Europa Star, have been attending Baselworld for four generations.

This year, we will be hosting our booth for the 80th consecutive year.

My great-grandfather, watchmaker/editor or editor/watchmaker (depending on who you talk to), was already hosting a booth in the 1930s.

But like us in the media, and like the brands themselves, the event must learn to adapt. The goldmine that it had been sitting on no longer exists.

Now, we know that any transition brings inevitable pain. But too often we underestimate the resilience of the companies in this industry.

In 2018, this is not their first rodeo, and it is not the first time they have bounced back. Only time will tell whether Baselworld will, too.

COVER HIGHLIGHT

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Patek Philippe Ladies’ Chronograph The latest in a long line of complications for women

1916

By Pierre Maillard

In 1916, Patek Philippe, which already had a rich history of complicated pocket watch designs to its name, sold its first minute repeater wristwatch in New York. It was a ladies’ watch: a gold-plated fiveminute repeater with two gongs, 27.1 mm in diameter with a depth of 9.3 mm. More than one hundred years ago, this was the Geneva watchmaker’s first foray into mechanical complications for women.

It was far from being the last.

Over the following decades, the manufacture would continue to make watches for women. In the 1950s it set up a specialised workshop dedicated to decorating, embellishing and gem-setting the cases and bracelets of women’s watches.

But it was not until 1997 that Patek Philippe decided to invest in what has now become a comprehensive

range of complicated watches created specifically for women: the dual time zone Travel Time (1997), Moon Phase (1998), Annual Calendar and

As of today, Patek Philippe offers what is probably the most complete range of mechanical complications for women of any watch brand.

Moon Phase (2005), Chronograph (2010), Flyback Chronograph (2011), Minute Repeater (2011), Universal Time (2011), Perpetual Calendar and Moon Phase (2012), Multi-Scale Chronograph (2014), Universal Time and Moon Phase

(2014). And these are just the original models – there have been countless variants and improvements since they were first released.

As of today, Patek Philippe offers what is probably the most complete range of mechanical complications for women of any watch brand. The undeniable success of these women’s timepieces relies on maintaining a vital and particularly delicate balance: behind the classically elegant styling and understated chic lies a wealth of mechanical virtuosity. The result is complications that are useful, extremely easy to use, and the perfect response to female clients’ burgeoning interest in technically sophisticated and timeless watches.

1997

P 594 5-Minute Repeater

Ref. 4937 Annual Calendar /Moon Phases

1998

Ref. 4858 Moon Phases

Ref. 4958 Moon Phases

2005

COVER HIGHLIGHT

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Ref. 4864 (1997) Travel Time In 1997 Patek Philippe launched the Travel Time, in men’s and women’s versions.

Its ingenious mechanism allows the wearer to see the time in two different time zones in a simple, functional and extremely elegant way.

The display combines two completely independent hour hands, distinguishable by their different colours – gold for home time and black for local time. When the time zone function is inactive, only one hand is seen, because they move around the dial together in perfect unison, one hidden behind the other. The hour of the second time zone can be set very easily using the two corrector pushers integrated into the caseband of the watch, which move it forwards or backwards (an innovation that was awarded a patent back in 1959).

This Travel Time watch, an instant hit with the ladies, marked the inauguration of Patek Philippe’s vast women’s complication programme, which was to be expanded regularly and frequently over the following two decades.

2006

Ref. 7071R (2010) Ladies First Chronograph Ref. 4936 (2005) Annual calendar and moon phase

Ref. 4857 (1998) Moon phase and small seconds In 1998, Patek Philippe unveiled a new women’s complication in a classic Calatrava case. This new watch was fitted with the manufacture’s smallest mechanical movement, which was nevertheless exquisitely executed (at the time it bore the Geneva Hallmark, since replaced by the Patek Philippe Seal). The watch showcased a completely new display, with the moon phase and small seconds arranged side by side.

2007

2010

In 1996, Patek Philippe launched its famous Annual Calendar, a patented and therefore exclusive complication. Practical, legible and easy to use, but highly technically sophisticated, the Annual Calendar was a runaway success. In 2005, for the first time, Patek Philippe put this complication into a women’s watch with delicate, feminine styling. It featured a natural mother-of-pearl dial, and the bezel was set with 156 round diamonds in two different sizes, arranged in twin staggered rows.

Its 39 mm diameter made the indications more readable (hours, minutes, seconds, day, month, date, power reserve and moon phase). It required adjustment just once a year, at the end of February.

2011

Ref. 4934 Travel Time

Ref. 7059 Split-Seconds Chronograph

Ref. 7180/1 Skeleton

2012

2010 was a landmark year: it was the year Thierry Stern marked the start of his presidency in Paris’s Place Vendôme with the launch of a new hand-wound chronograph movement, the Calibre 29-535 PS, entirely developed and manufactured in-house. It is a traditionally constructed column wheel movement, with six patents to attest to its functionality, high reliability, precision (-3/+2 sec/day) and ease of use.

This brand new movement debuted in the Ladies First Chronograph. As its name suggests, this was the first time Patek Philippe had launched a new calibre and a new complication in a model destined for female wrists.

It proved hugely popular. So much so that Patek speeded up its production of new complications for women – twenty more were released between 2010 and 2018.

2013

Ref. 4968 Moon Phases

Ref. 7000 Minute Repeater

Ref. 7130 World Time

Ref. 7134 Travel Time

Ref. 7121 Moon Phases

Référence 7140 (2012) Ladies First Perpetual Calendar

Référence 7130 (2017) Universal Time

In 2012, following on from two extra-thin ladies’ complications (a flyback chronograph and a minute repeater), it was time for a perpetual calendar, the first complication of this kind to be offered as part of the company’s current collections for women. It had all the ingredients of an ultrafeminine timepiece: a round 35.10 mm Calatrava case in rose gold, a lustrous creamy white dial, delicate curved lugs, and a diamond-set bezel and clasp. The hour, minute, date, day, month, leap year, 24-hour indicator and moon phase display are beautifully arranged in the space, making the watch eminently legible.

The watch comes with two interchangeable casebacks – one in solid rose gold and the other made of sapphire, through which the architecture and finish of the extra-thin 240 Q calibre, one of the watchmaker’s flagship movements, can be admired.

After a preliminary outing in 2011, the Universal Time Reference 7130 returned in 2017 in a particularly elegant new version of one of Patek Philippe’s most iconic complications. The white gold case, diamondset bezel, cities disc and ring bearing the 24 time zones all draw the gaze towards the centre of the delicately worked guilloché dial in shades of blue and grey.

Local time is displayed on the hands in the centre of the dial, and the name of the associated city appears above the little red arrow at twelve o’clock, showing the hour and whether it is day or night. The hours of the other 23 time zones can be read at a glance off the 24-hour disc, which rotates anti-clockwise inside the city disc. To select a different time zone, one simply presses the pusher at 10 o’clock to bring the chosen city into the 12 o’clock position. Intuitive, harmonious and effortlessly classy.

2014

2015

2016

2017

Ref. 4948 Annual Calendar / Moon Phases

Ref. 4968/400 Moon Phases

Ref. 4947 Annual Calendar / Moon Phases

Ref. 7175 World Time Moon

Ref. 7121/1 Moon Phases

Ref. 4675 Multi-Scale Chronograph

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2018 The new Ladies Chronograph, the latest hand-wound chronograph The Ladies First Chronograph ref. 7071 of 2010 remained in production until 2016. After a highly successful reign, this most seductive watch bowed out in favour of the latest reference, the 7150, simply called the Ladies Chronograph. Like the previous chronograph in its day, this new timepiece is now the only chronograph in Patek Philippe’s Ladies collection.

The new hand-wound chronograph comes in an elegant 38 mm round rose gold case, with a slim bezel set with 72 round-cut diamonds. A gently domed box-type sapphire crystal, protruding and slightly twisted lugs and “mushroom” pushers are all design elements that remind us that vintage styling is back.

But these subtle references serve only to strengthen the watch’s timeless appeal.

The same balance between functionality and aesthetic subtlety can be found on the dial. Its silvered opaline finish is both technical – offering uncompromising legibility of the chronographic and pulsometric indicators – and delicately harmonious. The hours and minutes are read off the tips of the Breguetstyle rose gold hands, which point to the Breguet numerals, also in rose gold, applied around the periphery. They are encircled by a fine gold line, as are the small seconds and the 30-minute counter.

The new reference 7150 (or, to give it its full name, the 7150/250R-001) is mounted on an alligator bracelet, with a rose gold clasp set with 27 diamonds.

At the heart of the hand-wound Ladies Chronograph, visible beneath the box-type sapphire glass perfectly integrated into the aesthetics of the caseback, beats the very same Calibre CH 29-535 PS that made its debut in 2009. It is the latest offspring of the Geneva watchmaker’s longstanding love affair with the chronograph, which dates back to the mid-19th century. The relationship has resulted in numerous inventions, patents and innovations, including the little-known 1923 commission that resulted in Patek Philippe supplying the very first flyback chronograph wristwatch.

This Calibre 29-535 PS is the successor to the famous Calibre CH 2770, built on a Nouvelle Lemania base movement, which is highly prized by connoisseurs of traditional movement architecture. It is also the first manual chronograph movement entirely designed and built in-house. Its perfect architecture and classic construction are accompanied by six different patents which cover optimised energy transmission, friction reduction, self-regulation and synchronisation.

Thanks to its reliability, its precision and its robustness, it is a calibre of reference, both aesthetically and technically.

There is no doubt that this new hand-wound Ladies Chronograph, with its superlative movement and exterior finish, marks the start of a new era in the already rich history that unites Patek Philippe with the growing number of female watch complication enthusiasts.

COVER HIGHLIGHT

COVER HIGHLIGHT

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BASELWORLD 2018

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MIDO MULTIFORT DATOMETER LIMITED EDITION

CARL F. BUCHERER MANERO PERIPHERAL 43 MM

TISSOT BALLADE

ANONIMO EPURATO

BASELWORLD 2018

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DE GRISOGONO ALLEGRA 25

BULGARI DIVAS’ DREAM MINUTE REPEATER

OMEGA DE VILLE TRÉSOR

CHANEL J12 COLLECTOR

BASELWORLD 2018

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BELL & ROSS BR V2-92 & BR V2-94 STEEL HERITAGE

GLASHÜTTE ORIGINAL SENATOR CHRONOGRAPH – THE CAPITAL EDITION

ORIS CARL BRASHEAR CHRONOGRAPH LIMITED EDITION

BREITLING NAVITIMER 8

BASELWORLD 2018

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JUNGHANS “MAX BILL LINE”

NOMOS AUTOBAHN

LUNDIS BLEUS 1100-OX “ONYX”

MOVADO MUSEUM 1881 AUTOMATIC

BRANDS

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Omega: “A little more time…”

The “elder brother” of the Swatch family and the world number two watch brand, Omega has multiplied initiatives under the energetic leadership of Raynald Aeschlimann. A new and much talked-about e-commerce site in the United States, a new production site in Biel, strong capitalisation on the taste for vintage watches in the more mature markets, numerous sales outlets in mainland China – we talked about Omega’s roadmap with the man behind it.

Interview by Serge Maillard and Ashkhen Longet

In this issue of Europa Star, we invite you to meet two key figures of the Swatch Group. Incidentally, they both served in the Swiss army.

That necessarily builds bonds.

Today, they are both part of the top management of the world’s largest watchmaking group, where both have worked for a very long time.

Having ascertained from colonel Walter Von Känel who gives the orders at Longines over a tête de veau in St-Imier (see p. 14), we set off to meet officer Raynald Aeschlimann, 47, who pilots Omega from his new building in Biel. Inaugurated last year, it was designed by the reputed Japanese architect Shigeru Ban. Omega has a strong presence in Asia, and even more so with the Olympic Games in Pyeongchang this year. And you’re continuing to put a huge effort into marketing there. Is that continent the brand’s “impassable horizon”?

You have to understand the demographics that are still operating in Asia. We’re only just starting to grow in China and Singapore, not to mention India…. In mainland China, we already have 200 sales outlets, including 30 of our own boutiques.

Sociologically speaking, we’re destined to grow with the country!

On the more mature watch markets, in Europe, you’ve capitalised a lot on the taste for vintage watches, with the Speedmaster and promotions like Speedy Tuesday (ed.: the sale of 2,012 special Speedmaster models, which were sold in under 5 hours last year)...

The ‘1957 trilogy’ (Speedmaster, Seamaster, Railmaster) we launched last year at Baselworld was also wellreceived. People talk of ‘vintage’, but it’s not just a matter of copy-andpaste. Let’s say that we updated Omega products to suit the tastes of collectors in those countries. But we still need stronger emphasis on vintage models for women. We’re going to put that right next year.

We’re also wondering about your potential in the United States, the stronghold of your principal competitor. Your latest offensive has been to launch your own e-commerce platform.

The United States itself still has potential before it becomes a ‘mature’ watch market, and that should be to our advantage. Proof of that is that the average price in our own 28 boutiques is higher than in the other outlets in the country. There’s a real passion for the watch and its history in the United States, and that showed during the Speedy Tuesday operation. Americans were among the top three buyers. That prompted us to open an e-commerce site last autumn, our brand’s first.

Yes, that caused a lot of tongues to wag. It looked you were opening hostilities on the internet. After opening your own boutiques, now you’re into e-commerce – that’s not likely to reassure the retailers…

It’s not reassuring for the retailers who don’t believe in Omega any more, of course. But I’d remind you that we’ve cut the total number of our outlets worldwide from 7,000 to 2,500 today. And we’re going to keep those 2,500! They’re very proud to work with us and they earn a lot more thanks to Omega than with sales of other brands. They’ve succeeded in generating additional business thanks to our brand.

What was their reaction to the launch of your e-commerce site in the United States?

Let me state quite clearly: my view is that it isn’t ’killing’ the distribution chain. It’s a way of reasserting ourselves and strengthening our direct contact with the end customer. You have to face up to reality: some of our customers already buy online, because they’re dissatisfied with the distribution network as it now stands. It’s a question of creating a network over a vast territory. Some of our customers in the United States are 600 kilometres from the nearest Omega outlet.

Raynald Aeschlimann

BRANDS

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It’s cultural too: maybe an American customer is more prone – today at least – to buying online than a European…

in-house, which gives us faster response times.

On that subject, you inaugurated your new production site in Biel last year. What are the actual advantages of that?

Yes, we took the decision after observing that traffic on our US website was huge. In the US, e-commerce in watches is now an important reality, because either for reasons of convenience or geographical remoteness it complements the distribution network.

It raised productivity – and the morale of our workforce. That’s a crucial point, because they work in a setting they’re proud of, where they feel at ease, and where the atmosphere is excellent. Having everything under the same roof, that’s the factory of the future. That will help us grow faster.

What is the purpose of the e-commerce site in the United States?

To serve as a test before being applied to the rest of the world?

As you said, the Swatch Group is a vertically integrated industrial power. It’s also at the cutting edge of innovation in terms of automated mechanical watch production, with the Sistem 51 by Swatch and the Swissmatic by Tissot. Is Omega going to benefit from that too?

It isn’t a simple ‘test’, because it’s set to last. The United States has been the first to benefit from it, because that’s where we saw the greatest potential and the highest demand. As regards complementarity between physical and virtual sales, a much talked-about subject on the market, there was a total vacuum there.

Wait, let me emphasise one thing: today, we use automation for quality control and for analysing the finishes of our watches, but absolutely not to replace the employees who produce our watches. The act of creating a mechanical watch in our price range will remain the work of humans.

If that kind of complementarity is so important, why aren’t you present on an e-commerce platform like TMall (a subsidiary of Alibaba) in China, your flagship market, like your Swatch Group brother-in-arms Longines?

We apply a simple rule: we are not present on sites like Amazon or TMall. Despite migrating to the web, we’re not forgetting the brand’s experience and image. And at the moment, I don’t see how we can put Omega’s experience on those sites.

Omega Seamaster Diver 300M

What is currently Omega’s fastest growing market?

Switzerland is performing incredibly, it’s in the top three in Europe.

After that, I’d say the United States, given its strong growth since last year, especially online. And we shouldn’t forget Macao, which is a real rising star in Asia and has turned into a holiday El Dorado for Chinese families.

What do you need now to reach the top of the podium?

Time! The fact that we’re the world number two is thanks to the huge amount of work we’ve already put in.

And we have this legitimacy of tradition: this year, we’re celebrating the 70th anniversary of the Seamaster.

While we’re on the subject of legitimacy of tradition, how do you explain that two brands – Rolex and Patek Philippe – monopolise the top rankings at watch auctions, which have really boomed in recent years, even though Omega has a long heritage too?

Personally, I find that watch auctions are becoming far too much a place of speculation rather than passion... Our day will come! By contrast, I see far more sincere passion where pre-owned watches – which are very popular with the younger

How do you function in relation to R&D? The Swatch Group is very much vertically integrated and we’ve created research units at every level. But we’re not averse to joint research with the entire sector – look at the development of silicon components, which was conducted at CSEM (Centre suisse d'électronique et de microtechnique) with resources from the Swatch Group and other major industry players.

The industry seems to be multiplying watch personalisation initiatives. And that’s also creating huge logistical challenges. What’s your approach at Omega?

generations – are concerned, and the prices aren’t skyrocketing there.

We support the pre-owned market, and we’re one of the only brands in the world to do so in our price segment. For example, we never refuse to restore a watch. We return all the changed components, even if people intend to personalise their watch that way. And nearly ten years ago, we were precursors when we opened our first Omega Vintage Boutique at Somlo in London.

We’re thinking very seriously about making that theme an integral part of our strategy.

tomer base who want a higher-end, elegant watch with diamonds. This strong demand has prompted us to create a ladies’ watch, which I would situate between the Constellation and the Seamaster.

What collections are you going to be promoting this year?

The world has changed, it’s more impatient and it also forgets faster. So we have to take care to reveal information at the right time, to take advantage of the emotion at that moment. We can’t achieve everything at Baselworld any more, we have to spread out introduc-

The two big themes until autumn are going to be the Seamaster 300, on the occasion of the anniversary we’ll be celebrating, but also the De Ville. Omega also has a young cus-

You succeed in building strong expectations around certain limited Speedmaster editions for a limited time, like on Speedy Tuesday. Are the times when all the innovations were showcased at Baselworld well and truly over – and might that also explain the discussions about the future of the trade fair?

Improving time-to-market – that’s what my priority has been since I arrived.

My ultimate dream!

tions intelligently. That also sets us a rhythm in-house.

Improving time-to-market – that’s what my priority has been since I arrived. My ultimate dream! The case of Speedy Tuesday highlights both the passion and the impatience of our customers. Yes, we have to go faster, but no, we’re not robots. The human dimension is still important. It might be a limiting factor as far as time-to-market is concerned, but it’s essential. On the other hand, we have the very good fortune that the Swatch Group is vertically integrated. Most of our suppliers are

One of our main efforts is focused on the choice of strap. You’ll see it this year, especially with the NATO strap, which is very much in vogue.

Personalisation has its good points, but let’s not forget that the success of a company operating in the luxury market also depends on a certain brand image. The stronger that is, the less personalisation will be necessary, if it’s possible at all.

What is the average price today at Omega?

It’s 6,000 francs and we’re a leader in the 3,000 to 8,000-franc segment.

It’s in that category that our history, our legitimacy, our strength, lies.

We command a huge share of that market and that’s where our ‘comfort zone’ is. You won’t see us trying to push any higher, or developing smartwatches anytime soon. In fact, I call them smart instruments, because they have no soul!

BRANDS

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Giving the orders…

Walter von Känel, CEO of Longines At 76, Walter von Känel still rules Longines with an iron hand. This colourful and charismatic former Swiss army colonel is affable, but firm. "The Boss", as his troops call him, is a veteran of many battles and has succeeded in making Longines a veritable “war machine” in an affordable price segment often neglected by the upper echelons of Haute Horlogerie. Today, Longines is on the way to achieving a turnover of 2 billion.

Interview by Serge, Pierre and Philippe Maillard

Who gives the orders?

“When I started at Longines in 1969, the watchword was: ‘technology gives the orders, the market follows’. It took us a while to reverse this attitude.

Moreover, up to 1988, Longines was a ‘manufacture’ (although there are as many definitions of ‘manufacture’ as there are pages in the Bible!), producing in-house cases and movements, including chronographs, but no dials or hands.

When SMH (the future Swatch Group) was created, they conducted a study and took the decision to stop manufacturing movements in-house and work solely with ETA movements. Mr. Hayek Sr. had decided to make a clear distinction between the brands, the movement manufacturers and the services, such as timing (see our article about Swiss Timing on p. 16).

And let me tell you, I don’t regret it, even if it was frustrating at first.

So, on 3 February 1988, I had to inform the troops that we were stopping manufacturing movements and were delegating that to ETA. Today, we’re fortunate enough to have very high-quality product development partnerships with our brothers-in-arms at ETA. So we succeeded in changing the mindset at Longines and since then, it’s the market that gives the orders, and the technology follows!”

The mission: occupy a territory “In 1984, Nicolas Hayek Sr. entrusted one sole and unique mission to me: ‘Walter, you’re going to be number one in your price range.’

It was clear and simple – a colonel who receives an order as simple as that needs nothing more!

As far as Swiss watch export statis-

tics are concerned, we can measure ourselves against the rest of the field, and let me tell you, I’m perfectly happy in my price bracket! We account for more than onethird of Swiss exports in the 1,000 to 3,000-franc recommended price range. I generate two-thirds of my sales with 50 references (in terms of cases).

Last year we produced 1.5 million watches, 80% of them mechanical, divided 50-50 between men's and ladies’ models and with special emphasis on the three-hand and calendar models. Backed up by the industrial strike force of Swatch Group, Nick Hayek recently announced we were heading for the two-billionfranc turnover mark.

It’s a high-volume market. People are interested, that stands to reason… So we’ve created a ‘reception committee’ for those who come along.”

Reconnoitring in an electronic minefield “When I first started, in 1969, I was sent to the United States as an intern.

After that, I was assigned to cover Japan just when quartz was developing. Watchmaking was changing, we had to react.

As regards electronic watches, in terms of battery-run movements we used the Dynotron, and then the Mosaba, which was a tuning fork watch, in response to the Accutron

by Bulova.

Sales pressure prompted the Longines team to venture into analogue quartz territory and quite rightly. In 1969, we launched the Ultra-Quartz, then we began to buy quartz movements from EM-Marin and then ETA. Quartz dominated for a time, but today it accounts for only 20% of our production.

We launched our own counter-offensive and were precursors with the V.H.P., which performed better than the traditional quartz – and which we re-issued just last year.”

Walter von Känel

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Basic infantry division

Longines HydroConquest

“As regards mechanical watches, we had a handful of very powerful in-house movements, which were transferred to ETA. That soon gave us the advantage of being able to invest strongly in brand recognition and the end product, unlike other brands.

And thanks to our excellent relationship with ETA, we developed two movements specifically for the high-volume market, one men's and one ladies’. They’re our basic infantry division!

For the men’s watch movement, we started with the ETA 2892A2, which at Longines became the A31.

Its performance reflects the evolution in component production.

For example, in the Record collection, the A31 exists in a silicon and COSC version.

The ladies’ movement accounts for around 50% of our automatic watches. Historically, it was the ETA 2000/1, a small round-diameter calibre (diameter 19.4mm, thickness 3.60mm) that allowed us, combined with other improvements, to make 25.5mm watches, which we improved by making it 0.5mm thicker.

That became our A20 and it’s a very important product.

All that is done in dedicated ETA workshops on our own premises: 250 people work there.”

Since 1867, all our watches have had a personalised reference number on the back of the case, so we have traceability throughout our entire network. I know immediately who I sold each model to. Our subsidiaries have the obligation of recording the reference numbers of watches they sell to retailers. We have to cut off supplies to retailers who feed those markets!

We recently seized a huge haul of watches on the parallel market thanks to the Chinese customs.

We have very good relations with them, which means we can trace back the supply lines. We do the same with counterfeit watches. We produce huge quantities and unfortunately, that attracts parallel marketeers or counterfeiters. It’s the price of success.”

Walking pace in China “We’ve been present in China for a century and a half. It’s a significant market for us and one that’s still growing. To balance our markets, we have to make more effort to promote and distribute our watches in Europe and the United States. But they’re very competitive markets.

Luckily, we haven’t had any problems of surplus stocks. Every morning, I receive the lists of sales by reference and country. I can still look myself in the face!”

An industrial war machine

Obedient soldiers at Baselworld

“The degree of automation of our production lines depends on the component. If you’re talking about high-volume movements, it’s incredible how many ETA is capable of producing. The model most emblematic of this industrial strength has to be the Sistem51 by Swatch.

And I’m very glad that the group is helping automate or mechanise calibre production.

Even so, for a calibre as sensitive as the ladies’ model, I’m impressed by the production lines. For example, you don’t get the glitches you used to see in the oiling operations, which were caused by human error.

And then it’s impressive to see how the case manufacturers have evolved.

I do a tour of our suppliers every month. The performance of the new generation of the CNC machines that do 20-30 operations is beyond belief. Hand production is also largely automated now, but much less so the dials. And where machines haven’t been able to replace the human hand is in polishing, especially the cases and bracelets.”

“My first Baselworld was in 1969. In the Swatch Group, we decided that the Baselworld question should be decided by HQ. And we’re obedient soldiers who do as we’re told.

What counts for us at Baselword is the retailers. And it’s a pity that the larger retailers have to come to Switzerland twice because of the different dates of the Geneva and Basel trade fairs. Having said that, we’ve always done well at Basel, but I never show a watch there that isn’t already in production. I have to deliver the same year... Basel is also the first litmus test to see whether what we’ve put in the pipeline is relevant.”

The battleground of customer service “Given the volumes we produce, I’m very committed to customer service. It’s very highly developed at Longines. I always say that’s the best publicity we could have, and

the cheapest. Today, news of bad customer service gets around; on social media that kind of information spreads like wildfire.

All the customer service on the basic calibres is done either in our workshops at St-Imier or directly in the 37 branches of the Swatch Group all over the world. The level after that is the retailers. The best ones are approved for customer service and can request components. We also have a special Heritage workshop where we do all the customer service for watches produced during Longines’ in-house manufacture period, up to 1988.

The Swatch Group has made a great leap forward in customer service in terms of quality and effectiveness, including making reception premis-

es, more welcoming. But the public enemy number one of watches today is magnetism. I’m certain we’re going to make a big hit with the VHP that's highly resistant to magnetism. The watch will stop if you enter a magnetic zone and automatically catches up the lost time.”

Blasting the parallel market “As for e-commerce, we’ve just opened our own site in China, after the one in the USA. We also sell at the same prices, without discount, on e-commerce platforms. We started last year with TMall, a subsidiary of Alibaba. If it’s not the official price, we don’t sell!

“In 1984, Nicolas Hayek Sr. told me: ‘Walter, you’re going to be number one in your price range.’”

In Beijing, I met the director of TMall, which also sells on the parallel market. But we’re fighting the parallel market, that’s my personal war! I recently blasted parallel market players in Italy, Germany and Austria. And in terms of volume we’re not talking peanuts, let me tell you. We’re also putting pressure on TMall to curb the parallel market.

Keep soldiering on!

“This year, we’re making a special effort to consolidate the V.H.P. and Record collections we introduced last year. So we’re launching a Chrono V.H.P. Conquest and a Record model in stainless steel and gold.

In 2018, Longines has got off to an extraordinary start. In January I nearly fell off my chair, let me tell you.

And more and more information is coming in suggesting that Longines would now be the third largest Swiss watch brand in the world (consolidated turnover). 2018 has got off to a good start for everybody and for the Swatch Group even better.

But so far, the best year in our history was still 2014.”

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Swiss Timing: A view of the slopes Swiss Timing also sells equipment to third parties, from photo-finish cameras to photoelectric cells to fully equipped swimming pools.

After following up on the use of Seiko equipment at the World Athletics Championships in London last year, Europa Star had the opportunity to visit another prominent sports timing brand, the world leader Swiss Timing. This Swatch Group company was in the front lines at the recent Winter Olympics in Pyeongchang, South Korea. Omega, Longines and Tissot are its principal "clients".

By Serge Maillard

230 tons of equipment, 300 timers, and the assistance of 350 volunteers. Omega's figures for the coordination of the Winter Olympics in Pyeongchang this February, of which the Swiss brand was the official timekeeper, are endlessly impressive.

Behind this infrastructure, as behind the scenes of athletics meetings, skiing world cups, Blancpain GT Series automobile competitions, Six Nations Rugby Championships, Tour de France bike races, or the NBA games sponsored by Tissot – or even the prestigious CIS equestrian competitions supported by Longines throughout the world – you'll find the same Swatch Group company: Swiss Timing, world leader of sports timing. You will almost never see its name take centre stage. But backstage, the brand is intensely active.

In February, Europa Star had the chance to visit the brand's premises in Corgémont, in the Bernese Jura.

It was quiet, since most of the employees were still in South Korea.

Founded in 1972 in order for Longines and Omega to join forces in sports timing, then grouped together under one roof in 1988

by Nicolas Hayek Sr., the company

The secrets of the photo finish

has its work cut out for it, since the Olympics equipment is under warranty until... 2032!

Sensors up close and personal The company, which employs more than 400 people on three sites in Switzerland and Europe, can time athletes' performances in no fewer than 135 athletic disciplines. One of the true changes of direction in its history was the appearance of the transponder (which emits signals from precise geographic points) marking the transition from the human hand to the machine and making it possible to provide increasingly precise data.

Time measurement continues to progress each year. Several innovations marked the recent Olympic Games in South Korea, which Omega "covered" for the 28th time in its history, beginning with Los Angeles in 1932 (for which thirty of the brand's stopwatches were sent to the United States and provided to the judges there).

It is worth mentioning two innovations in South Korea which illustrate the power of Swiss Timing.

During the ice hockey competition, each player's back was equipped

with a movement sensor which registered data and information in real time that could instantly be sent to television viewers or used subsequently for post-game analyses. Even the referee was equipped with a whistle detection system that enabled him or her to communicate with the timing station through a microphone in order to stop the watch as soon as the whistle was blown (making it possible to save at least half a minute compared to the performance of manual timers).

For the ski jumping competition, movement sensors were installed on the athletes' skis, directly registering the speed of each participant during the run, upon lift-off, at 20 metres, and upon landing. The system made it possible to measure various jumping techniques, right down to the angles formed by the athletes' skis. This data has quickly become essential, not only for the spectators, in the form of times and graphics displayed on the screen, but also to the athletes themselves and their coaches, since it can enable them to improve their performances.

Who does athletic performance data belong to?

One of the hot topics of the moment specifically concerns the "intellectual property" of the data gathered by an official timer.

For the time being, the rules – where there are any – are not uniform.

However, selling data is part of Swiss Timing business model. For example, during Blancpain GT Series automobile competitions, the SRO race organiser provides the data gathered to the teams and car manufacturers. This is part of a general service included in the participants' registration.

Today's coaches and public are clamouring for an increasing amount of statistics. The phenomenon makes itself felt to the point where, in the stadium, an increasing number of spectators appear to be captivated by their smartphone screens rather than directly watching the competition itself...

The precision offered by Swiss Timing now reaches 10/1000 of a second; but the times measured depend on the regulations of the partner federations. Thus in road biking, time is measured to the second, while in speedway biking it is measured to 1/1000 of a second.

The famous "photo finish" is probably one of the best-known services offered by the company, and one that keeps spectators holding their breath. Photoelectric cells placed on the finish line provide the result, which is instantly displayed on the stadium and television screens. But only the image of the photo finish provides the official time, and only the judges are qualified to establish the final result, which can lead to slight corrections being made to the time measured by the cells.

Indeed, the official time is measured by a camera filming a "line" of 3 mm along the precise finish. Moreover, a chip (generally the same size as a stamp) installed in the bib of each athlete gives the order in which each one crosses the finish line, for added security. However, in certain trials, it has happened that despite precision to 1/1000 of a second, it remained impossible to decide which athlete was the winner!

The question is, where on the athlete's body to place the photo finish cursor? It depends on the discipline: the torso for the 100-metre sprinter, the tip of the shoe for the longdistance runner, the top of the skate blade for the speed skater, and so on. Each federation has its own rule.

Foremost Swiss ambassador?

• Commonwealth Games • Asian Games • University Games • World Games • Olympic Games • Youth Olympic Games • ADAC GT Masters • FIA World Rally Championship

• Blancpain GT Series

• Swatch Beach Volleyball Major Series

Even more than the watches that we admire on the wrists of stars, the timing of competitions followed by millions of spectators throughout the world offers incredible visibility to Swiss watchmaking.

However, strict rules regulate logo displays: at the Olympic Games, the IOC sets the quotas of logo identification that will be shown on television per day and per sport. The height of the Omega logos on the instruments or screens in the stadium leaves nothing to chance, either: the logo may not exceed one-tenth of the total height of the object in question, for a maximum of 10 cm.

The only element that has not changed since the first Olympic Games of modern times, held in Athens in 1896, is the bell indicating the last lap. A bell, as Swiss as it gets!

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“Today’s vintage is the style of people who have no ideas of their own” In China, Longines has announced a partnership with Tmall. Is Bulgari already present on these platforms, or is it about to be?

Bulgari is a brand that seeks a certain exclusivity, so we're cautious about these mass sales platforms.

We don’t need hundreds of millions of potential customers. A few thousand suffice!

How do you manage the customer data you gather via your online and offline platforms?

Bulgari sells tens of thousands of watches a year, but we also sell perfumes to millions of customers. So we have a ‘staircase’ starting with more accessible products, like perfumes and accessories, and moving up towards watches and jewellery.

That also means that the brand has a slew of data today, even though its ambition is only to sell tens of thousands of watches. The pool we already have, and that we generate every year, is dynamic, and more than enough in relation to our watch-selling ambitions.

Jean-Christophe Babin

In the press releases we’re receiving in the run-up to Baselworld, we’re seeing two trends: a downsizing of dimensions, and vintage.

But at Bulgari, the design seems to be more futuristic than vintage...

With one foot in jewellery and the other in watches, Bulgari’s CEO Jean-Christophe Babin interprets the radical changes taking place in the industry with a sharp eye. Since this time our folio is devoted to the disruptions currently facing the watchmaking industry, we thought it only logical to look at where the future is leading – between 3D production, digitalisation and omni-channel sales.

Bulgari Serpenti

Interview by Serge Maillard and Ashkhen Longet

At Europa Star we’ve compiled a folio of 12 fundamental disruptions affecting the watchmaking industry and its future. We’re not going to ask you to find as many, but if we asked you to identify any waves of change that are likely to overtake the industry…

I’d mention three!

First of all, we shouldn't underestimate the capabilities of 3D production, which is set to challenge traditional manufacturing production, especially of watch cases. Current

manufacturers are advised to think very seriously about it. 3D allows you to design very light structures with great flexibility. That is going to transform the whole appearance of watches. We already produce jewellery using 3D. Another wave of change is the digitalisation of the world of luxury – including watches. Today, there’s nothing really conclusive in the way of digital watches, even if genuine watch brands like TAG Heuer, Frédérique Constant and Montblanc are also making smartwatches. In my view, the overall offering has expanded, with 15 million Apple Watches sold every year, but that’s ‘on top’.

Even at Bulgari we're continuing our

projects for secure wearable devices with our partner Wisekey, but we’re waiting for a standard bank protocol for e-payment.

The third aspect I’d like to highlight is omni-channel retail, with the idea that brands can at last go back to making direct contact with the end customer. This direct contact had vanished, but it did exist during the first generation of industrial watchmaking, into the 1930s.

After that, the brands became international, used intermediaries and lost this direct link. But at the same time, it means they’re going to have to cope with potentially losing control of their exclusivity through the new digital sales platforms.

According to management consultants Bain, online sales of luxury products will have levelled out at 25% by 2025. What does Bulgari actually sell online today?

Very little. We only have online sales platforms in four countries (China, Japan, US, UK). So the market is partially covered, and only recently. Secondly, watches aren’t made for selling solely online, because the aspect of trying the product on is still important. Most customers need to see the watch for themselves, they come to the boutique, make their choice, and after that they may finalise the purchase online. That’s why you can’t talk of ‘purely’ online sales.

The advantage of Bulgari is that we are real watchmakers, we don’t mess around with copying. Today’s vintage really is the style of people who have no ideas of their own. We’re lucky: our watchmaking past doesn’t stretch back very far – the Bulgari Roma was created in 1975 – so we have to look towards the future. That’s what prompted us to make Octo, Serpenti (created in 2010 and nothing to do with the jewellery Serpenti of 19401960), and Lucea in 2014. It’s true that we’re more excited by the idea of expressing ourselves in a dynamic way, rather than picking up historic codes and revamping them all the time.

Ah, I've just thought of a fourth disruption that you can note down: Daniel Wellington, it’s a brand which is a disruption in itself, since it was created online and has been a huge hit with millennials, with its neoclassical associations, its flat, gilded case and fancy strap. It’s the first watch brand to make a massive breakthrough with millennials, with prices in the 250-CHF range.

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“The Internet is going to allow Corum to filter its real partners” Jérôme Biard, the new CEO of Corum and Eterna, explains the mission entrusted to him, centred on Golden Bridge, Admiral, and a “return to common sense” for a brand that has experienced upheavals during the past decade.

Interview by Serge Maillard and Ashkhen Longet

You took the helm of Corum and Eterna in August 2017. What conclusions have you drawn in the meantime? Some sources are saying that the brand made a profit in 2016 for the first time in ten years, with sales of over 50 million francs...

We’re not very generous with figures because we’re owned by a group that’s listed on the stock exchange. But to give you an idea, we produced 10,000 items in 2017. For us, the year ended with sales slightly down on 2016, which means we’re not yet making a profit. The mission entrusted to me is precisely that: to restore Corum’s financial health, which means achieving at least break-even point and starting to build profits. I believe that will be feasible in 2019.

What are your key business strategies for 2018?

For us, they’re clear: refocusing our attention on our two product families, Golden Bridge, which today remains our greatest source of income, and Admiral. Of course, Bubble is our most crazily creative collection, but we have to produce it in more reasonable quantities.

We’ve also decided that we would only present some of our innovations at Baselworld.

Are you considering opening new outlets and starting new partnerships with retailers?

Today, there’s a general tendency to curb the number of outlets worldwide; to be more exclusive, rarer, and above all to have reliable partners. We’re going to follow that trend. On the other hand, we’re in the process of reviving markets that are extremely important to us,

such as Japan, where we already had some very encouraging initial signs in 2017. The other country we’re going to be focusing on is the United States, where Corum was very strong historically. We’d like to work in that difficult region again. And lastly, Europe, where we still have too little visibility for the moment.

What about synergy with Eterna, where you’ve also taken up the reins? And with Eterna Movement, the movement manufacturer?

We use lots of Eterna movements for the Bubble and Admiral Squelette collections. But we’re two completely different brands and we want to stay that way, even if we’ve pooled lots of resources, such as in logistics, marketing and finances. The Eterna brand has suffered a lot, it almost went out of business. Our priority now is to bring it back onto the straight and narrow, but gently.

For Eterna, we have an extremely limited strategy in terms of the number of references, and it’s focused on KonTiki.

What are your avenues for product development in 2018?

Jérôme Biard

Playing with the most iconic products – we’re fortunate enough to have lots of them. The most emblematic is the Coin Watch. It’s very contemporary, we’ve even managed to create a Bitcoin watch. I’d like to cultivate the notion of eclecticism and work on very different collections.

“The other country we’re going to be focusing on is the United States, where Corum was very strong historically.”

And what’s your strategy with regard to digitisation?

Of course, we’re going to protect the retailers by giving them exclusivity over certain references. What we’re going to be extremely touchy about is price control. We don’t want the internet to be synonymous with discount.

We launched our new website in mid-February 2018 and the high point is the opening of our e-boutique in mid-March. We’re convinced it will work, because people like buying over the internet, and also, we want to talk directly with our end customers. A company like us, which produces 10,000 watches a year, needs to know its customers inside out.

In fact you’ve cancelled your partnership with Amazon...

Yes, that was my first decision on arriving at Corum.

But isn’t opening an e-boutique going to create conflict with your retailers?

Our policy is one of retailer reward.

If we feel that certain retailers have an important role to play and customers write to them, visit their boutique, and see them as a serious partner, they will evidently benefit from purchases from the e-boutique. But if we see that our brand isn’t doing any business there, we’ll take a tougher stance. Ultimately, it will be a means of filtering the real partners from the “non-partners”.

And if you could only keep one new model?

Corum Golden Bridge Joachim Horsley

I’d like people to remember the Golden Bridge that was developed with the musician Joachim Horsley and decorated with an extract from the original score of Beethoven’s 7th Symphony. It’s a magnificent timepiece that’s paving the way to other, more poetic ideas. We’re going to offer our customers a personalisation service for this model.

It’s a whole new phase in Corum’s development.

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MDISRUP-

TIONS The risky lure of neo-vintage Slowly but surely over the past few years, a vintage wave has been sweeping through the watchmaking establishment and influencing styles like few phenomena before it.

Virtually no brand, whether large or small, luxury or affordable, historic or recent, is unaffected. Nearly all are betting – heavily in many cases – on their vintage. Or more accurately, their neo-vintage. A wise move, or not?

The exponential rise in niche markets Hardly a day goes by without a new brand emerging, or trying to emerge, mainly on platforms such as Kickstarter. A surprising fact, given that the currently beleaguered watchmaking industry is gradually recovering from a series of lows over the last three years. Competition or opportunity?

STYLES

STYLISTIC DISRUPTION

B C

XXL gets a downsizing Watchmaking was becoming larger than life, beefed up beyond all recognition. Now the superdoping would appear to have stopped and a little more decency has been restored. Another style, another mentality, another era. XXL is OUT. It's back to the drawing board, and we need to call out the size issue.

Personalisation, for the privileged few?

Reserved until recently for a few high-end watches, personalisation is now gaining ground. Mainly as a result of the internet, new technologies, or the new watch configurators, many brands are attempting to seek out the spotlight, or extending their pitch, by proposing a range of bespoke models. But the phenomenon has yet to become widespread.

Watches and connection: parting on good terms Every market needs a strong symbolic leader, a locomotive, a benchmark to ensure its survival.

Rolex is that symbol for the “traditional” watch, and Apple for the “connected” watch. The two markets appear to be able to co-exist happily in the long run, contrary to what we may have believed.

D E

In the last two decades, we have seen mechanical watches grow in size, flaunt their muscles and display their innards. They have become more extrovert, trying on different colours and unusual shapes.

Complication has been piled onto complication, and tourbillons have joined the dance, whirling around in twos, threes and even fours.

There was a touch of madness in the air. Prices skyrocketed; anything and everything seemed possible, provided it could physically be done, and there was someone prepared to pay for it.

But times have changed. Stylistic arrogance is passé. Millennials are into vintage and neo-vintage.

Minimalism is back in fashion. Dials are reverting to the classical codes, sizes are shrinking and watches are becoming wearable once again.

Smartwatches have reached maturity, and the watch industry is breathing easier, relieved at having dodged a bullet. But at the same time, the digital revolution has brought about an explosion of watch start-ups, each striving to carve out its own niche.

This is both positive – redoubled stylistic creativity, albeit often with vintage inspiration – and negative, with a proliferation of copies, mediocre products, flashes in the pan and a confusion of values.

F

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The end of the "regular" retailer

CHANNELS

COMMERCIAL DISRUPTION Little now remains of the old, well-oiled and robustly constructed channels that used to convey watches placidly from the Swiss factories to their distributors and retailers, and thence to the end client. Today, what we have instead is a tangle of conduits, some electrified and some not. Some of the less well-maintained channels no longer convey very much merchandise, while the sexier pipelines link the brands directly with their end clients.

Suddenly, with digitisation, the watch industry faces such a plethora of possibilities that it doesn’t know where to turn. What is the best option, commercially speaking? Local events with loyal partners? Or would it be better to set up a dedicated e-commerce operation?

And what about Instagram? How can you be sure that your “influencers” aren’t just hot air merchants? New questions require new answers.

We asked two people with insider knowledge.

This period of disruption for commercial channels has provided opportunities for new actors to jump into the void, from Tmall in China to Amazon in the United States. And these newcomers have a significant stake in the pre-owned and/ or vintage watches so highly sought after by millennials. We talked to the founder of one of the biggest watch e-commerce platforms, Chrono24, who revealed his ambition to develop a closer relationship with the brands themselves. Might we see these two worlds finally coming together?

Bucherer’s acquisition of Tourneau is the latest sign to date of a consolidation in distribution, a move towards becoming more powerful in negotiations with watchmaking brands due to the flurry of ownname stores and their new e-stores. It looks like a number of small-but-innovative concept stores, run by genuine “curators”, have a rosy future ahead of them.

However, retailers content with setting up shops-inshops and ending up more like estate agents than watch professionals, have more to worry about...

The forced march towards digitisation Sponsored content on Facebook, e-commerce websites, transparent watch prices, massive investment in SEO on Google – faced with the digital tidal wave that is sweeping everything before it, the brands are at a loss as to which way to go. They're all over the place at once, often forgetting to include one key player – the retailer.

The risks are as numerous as the opportunities.

G

New actors: the ambitious plan of Chrono24

H I

The end of the passive ambassador?

J

LABS

MECHANICAL DISRUPTION Horological research, which for many years remained an intuitive discipline restricted to the watchmaker’s bench, has moved into the domain of science and technology. All the big groups have their own laboratories, and they’re filling their R&D departments with researchers from other fields. Research is blossoming in the search for new materials, non-Huygensian regulators, and hitherto undreamed-of mechanical solutions with abstractsounding names like “compliance” or “origami”.

On the manufacturing front, similar phenomena are at work: robotisation, the mechanisation of tasks previously performed by human hands alone, and automation are making giant strides. These days, excellent mechanical movements capable of passing COSC certification can be manufactured entirely by robots.

Mechanical watchmaking is transforming itself, hybridising... but we certainly haven’t heard the last of it. Electronics have penetrated to the heart of the most complex mechanisms, auguring a future of “augmented” mechanical watches.

Chrono24 is one of the main new actors of the watch market in the digital age. This leading global online marketplace for buyers and sellers of vintage and pre-owned watches, a German company with offices in Asia and the USA, is now aiming for a higher goal: convincing the brands themselves.

We’ve seen so many stars posing with a luxury watch on their wrist and being handsomely paid for the service that we've forgotten one thing: if these personalities have risen to the peak of their art, they must have talent. So why not make the most of it from now on? Ambassadors 2.0 directly participate in product development, which can also reduce the risk of the discrepancy – or even sheer hypocrisy – associated with a purely financial agreement.

Laboratories are the hub of progress

K L M

The full report is available in Europa Star Global Edition 2/18 or on www.europastar.com.

Watchmakers tried, prototyped, disassembled, reassembled and tweaked until it worked – like clockwork.

That was then. Now, watchmaking no longer revolves around the watchmakers.

Laboratories are the hub of progress.

Watchmaking and science: origami, nanotubes and capsules Mechanical watches are currently accurate enough to satisfy our everyday needs for precision. Their appeal lies elsewhere. Innovation is not so much a matter of necessity as of possibilities. Because thanks to laboratory research, the Huygensian age could now be over – and a new, lucrative era opening up.

The hybridisation of high-end watches

Hybrid designs combining mechanics and electronics is one path being explored in chronometric watchmaking.

But beyond precision, hybridisation may also be a strategic tool for moving upmarket (Seiko), asserting a pioneering spirit (Piaget), charming elegant women (Journe), putting a poetic slant on luxury (Van Cleef & Arpels) or jumping with both feet into the next-generation watchmaking of the 21st century (Ressence). Genuine progress or smoke and mirrors? It could be one or the other. Or a mixture of both.

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STYLES

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The risky lure of neo-vintage

Slowly but surely over the past few years, a vintage wave has been sweeping through the watchmaking establishment and influencing styles like few phenomena before it. Virtually no brand, whether large or small, luxury or affordable, historic or recent, is unaffected. Nearly all are betting – heavily in many cases – on their vintage. Or more accurately, their neo-vintage. A wise move, or not?

By Pierre Maillard

So much was patently evident at the last SIHH. Want names? Vacheron Constantin and their new FiftySix line; Jaeger-LeCoultre, virtually their entire stand devoted to the new and exhaustive Polaris collection; Cartier, who are launching a vast revival of Santos; Girard-Perregaux, staking all on the rebirth of their Laureato line; IWC and the 27 different watches of their Jubilee collection; Panerai and their reissue of the Luminor Logo. The list goes on.

It's the same story at Baselworld: Bell & Ross proclaiming of its Heritage collection that ‘the best of the past inspires the present’; Bulgari betting heavily on its 1940s Serpenti; Longines issuing new takes on its ‘very high-precision’ line of Conquest V.H.P. quartz watches from 1984; Mido commemorating its Commander line from 1959; Omega

taking inspiration from its 1976 chronometers for its Seamaster Olympic Games Collection. And so on.

So what does this ubiquitous craze for vintage mean for the brands, and what are the consequences?

Top-down or bottom-up?

One of the peculiarities of the vintage trend – which has gradually evolved into neo-vintage – has to be that it came from the bottom up; that is, from the consumer, rather than having been imposed from the top down, by the brands.

The persisting fashion for vintage, which has been gathering momentum for the past decade, is fuelled by a raft of social phenomena and anxiety-ridden times: nostalgia for the thirty glorious post-War years when everything seemed possible,

when the consumer society took off, when morals were liberated and rock and roll was born; the quest for durability and safe values as an antidote to the present, perceived as unstable, frightening and engaged in a race, the end of which is nowhere in sight; the need to consume responsibly, the desire for authenticity and simplicity in the face of continually escalating technology and the dematerialisation of daily life.

The impetus clearly came from the consumers: consumers reassured by vintage. And from there, a whole new market has gradually emerged.

The building of vintage As far as watchmaking is concerned, one man – Osvaldo Patrizzi – played a central role in the gradual building of the vintage market when he created Antiquorum way back in 1974. Little by little, all the auction houses began to offer vintage or antique watches.

The number of collectors grew exponentially. Then the internet came along and boosted the trend, democratising it at the same time.

Enter the specialist forums, online sales and peer-to-peer ad sites. And with the advent of bearded hipsters and other millennial types, vintage swelled further, shattering the market into a multitude of specialised subcategories.

The lure of profit also played a role.

When you know that a new watch is going to lose more than one-third or even 50 percent of its value (primarily VAT and sales margin) as soon as you leave the shop, it is not unreasonable to reflect that investing even only a few hundred francs in a second-hand vintage watch is far less risky than investing in a recent model. And the same holds true whatever the price range.

Given the recent record prices achieved at auctions – such as that of the famous Daytona that belonged to Paul Newman – do we have grounds to fear that a bubble is about to burst? Juergen Delémont, who heads up the department devoted to vintage watches at Beyer Chronometrie in Zurich – a ‘vintage’ pioneer – answers the ques-

“I’d compare the vintage market less to a bubble than to a foam bath with hundreds of little bubbles.” tion: “There are ups and downs of course, and there are peaks, when limits are reached. But I’d compare the vintage market less to a bubble than to a foam bath with hundreds of little bubbles. If one bursts, not far away others are growing, while others are shrinking.”

Neo-vintage strategies: successes for TAG Heuer and Tudor Faced with the evidence of this phenomenon, the established brands have begun to react in a variety of ways. While Rolex and Patek Philippe have skilfully made use of auctions to reaffirm and consolidate their popularity (and from this safe place quietly pursue their path of successive improvements), others, less favoured in auctions, have taken recourse to their own archives to draw inspiration there.

This is how we have come to see the gradual emergence of so many ‘new’ collections directly copied and adapted from older models and clearly aimed at winning over the growing fringe of buyers likely to succumb to 1950s, 1960s or even 1970s charm.

TAG Heuer deserves a special mention for leading the way on this sentimental journey, with the successive revivals of the Monaco (1969, re-issued in 2003), the Carrera (1963, reissued in 2004 and now the star of

the brand) and, lastly, Autavia (1962, re-issued in 2017).

As you might have noticed, with each success the neo-vintage seeks inspiration a little further back in time.

At Tudor, a meticulously rolled-out, totally neo-vintage strategy has given the brand a whole new lease of life.

Its example has spawned a host of emulators. But the question is: does this strategy work for everybody?

The uncertain adventures of Polaris We do not intend to answer this question, which is one of the questions the CEOs ought to be asking themselves, here. What exactly do we place in the balance?

We know that Breitling, under the leadership of Georges Kern, is buying up everything that resembles vintage Breitling – so the financial stakes are bound to rise. This determined strategy is confirmed by the recent Chronoliner B04, with its “matching rubber strap reminiscent of the Breitling braided-steel watch straps of the 1950s”.

As for Jaeger-LeCoultre, the sheer scope its Polaris operation surprised many. As if the company was staking everything on it, with almost the totality of its showcases and sales space devoted to the collection. The neo-vintage gentrification of the legendary and adventurous Polaris (1965) left many observers gaping.

The fact that the watch company of 1,500 different calibres is putting so much effort into a rather superficial, millennial-charm offensive leaves you wondering at the clout this stylistic trend is wielding.

And therein lies the danger. Isn’t it said that vintage lovers will always prefer the original to its offspring?

Forever blowing bubbles As stated earlier, the vintage phenomenon is like a foam bath. One bubble bursts, another forms. As the foam has surged, the fashion for vintage has won over numerous collectors, often young, with an increasing interest in ever more specialist niches.

Has vintage become a world apart, a network of peer-to-peer exchanges with its own, ever-morphing codes?

All the brands can do is watch events unfolding, enlist the services of aficionados and swim with the current.

Can anything be anticipated?

It's anyone's guess, but: ocean liners are slower to turn than bark canoes, and the fashion for vintage is a fast-flowing river that feeds on its own water.

DISRUPTIONS

24 | WATCH AFICIONADO

STYLES

C The exponential rise in niche markets Hardly a day goes by without a new brand emerging, or trying to emerge, mainly on platforms such as Kickstarter. A surprising fact, given that the currently beleaguered watchmaking industry is gradually recovering from a series of lows over the last three years. Competition or opportunity?

By Pierre Maillard

The comparison is risky and not always possible, but here goes. In the past few years, breweries have been producing local and craft beers all over the place, and successfully so.

Rather than viewing it as the competition cashing in on a few hectolitres here and there, the big beer empires have seen it as an opportunity to have so many microbreweries growing up all around.

Before the internet, before globalisation and crowdfunding, creating a brand was quite a different matter.

Each of these local beers started out as a burgeoning niche. One after the other, they were taken over. Today, Carlsberg owns 729 beer brands, AB InBev–SABMiller has 404, Heineken 297 and the ‘baby’ of the group, Asahi, owns 42. That makes a total of more than 1,400 beer brands for the Big Four.

The ‘Quickstarters’ We are prompted to make this comparison because, all around us, almost every day, a new watchmaking micro-manufacture, a new brand, a new niche is born.

Before the internet, before globalisation and crowdfunding, creating a brand was quite a different matter.

It was no coincidence that virtually all watchmaking brands founded previously had arisen from within a well-supplied, geographically localised industrial network. Now it is possible to launch a brand from anywhere, produce and assemble it anywhere using components from anywhere, and then sell it anywhere.

Mr. E., a Europa Star contributor with a watchful eye on all burgeoning brands, keeps meticulous records of his findings (Ed's note: a detailed list of all the above-mentioned brands may be found on europastar.com).

By way of example, here are a few identified recently. Their names probably won’t mean much to you, unless you like to hang out on the crowdfunding platforms. But, out

of these few startups handpicked from among a whole host of others, some may boom. Who knows?

• Vamatic, Slovenia, classic, minimalist, quartz, ETA automatic • Sekford, UK, clean, minimalist, Swiss Made, quartz • Xeric, USA, spatial design inspired by the Trappist-1 solar system, quartz Ronda • Grayton, USA, named inspired by “50 Shades of Grey”, sporty classic, Seiko automatic • Camden Watch Company, UK, inspired by Victorian Britain, quartz, Miyota automatic • Stage watches, Hong Kong, mid-range, assertive, geometric design, Sellita SW200-1 automatic • Linjer, Norway/Canada, super minimalist and clean, no signature • Mad Watches, Canada, neoclassical, automatic, tourbillon from PTS Resources Ltd (HK) Tourbillon under CHF 600.• Knut Gadd, Sweden, vintage minimalist cushion case, 100 Euros, Japanese quartz • Holthinrichs Watches, the Netherlands, architecturallyinspired, 3D printing, ETA 7001, Made in Delft • Lundis Bleus, Swiss, designer, pure, creative, Miyota 9016 automatic • Laventure Marine, Switzerland, 1960s vintageinspired diving watches • Filippo Loreti, Italy/ Lithuania, neo-luxury, classical Italianinspired, Miyota, USD 200 - 300.

The latter neo-brand, Filippo Loreti, is a record-breaker: in November 2016, 18,550 internet users signed up to the startup's second collection, which achieved a total of $5,170,445 collected in thirty days, making it the 18th biggest Kickstarter fundraising at the time, all projects combined!

However, judging by the scores of comments from customers disappointed by the mediocrity of a product, or indeed who never receive their goods, this apparent success raises a big question mark over reliability, durability in the long-term, after-sales service, and also the honesty of some of these ‘pure’ players and their true intentions.

But could this remarkable brand emergence simply be termed an ‘epiphenomenon’?

A thousand niche markets Just as local beers hijacked a few barrels from the big brewers here and there, so are the ‘quickstarter’ neo-brands eroding sales from the established brands. Disregarding or scorning the phenomenon is probably the worst possible reaction.

Kickstarter is a great observatory for emerging styles, fashions and trends. It’s like a poll conducted in real time; what’s more it’s conducted among consumers who are making a firm commitment.

What conclusions can be drawn?

Primarily, that the globalised world is paradoxically fragmenting into a thousand tribes, a thousand niche markets.

Pure vintage, neo-vintage, minimalist, classic, ‘disruptive’, sporty, designer, commemorative, military, diving, discreet chic, flamboyant, inventive… there’s something for every niche.

Including for some that have yet to be discovered.

The brewery groups, for whom niche beers are “one of the strategic channels” (but they don't broadcast the fact), thus try to “stay close to all potential consumer segments”. Does this mean that some of these watchmaking startups will also end up in the pockets of a larger group in the future, whether overtly or discreetly? Or will some of them manage to grow and develop into a brand that will truly become a fixture in the landscape?

This is clearly the intention of some, who endeavour to acquire the resources. Klokers, for example, with

its original display inspired by the typical 1960s slide rule, or Code 41, with its ‘100% transparent’ concept, claiming to want to ‘revolutionise the watchmaking industry by proposing top-quality mechanical watches at a fraction of their price’.

A few rare brands have nevertheless dared to take the plunge by launching a fine watchmaking company with the aid of participative funding.

Czapek & Co. became the emblematic example of such a course of action, thanks to its successful business trajectory, intelligent growth and the quality of its products. Yet few have dared to engage in such an adventure in its wake.

At the other end of the spectrum, the Daniel Wellington brand, which came into existence in 2009 as a pure niche ‘nouveau luxe’ brand, chic, minimalistic, but highly affordable, has sold millions of watches (both through direct distribution and via a rapidly built network of retailers) and has also had a big stylistic impact on a number of brands, including some highly established ones. “The Swede that made Swatch tremble”, ran the headlines in BFM Business in 2015.

Lessons in short circuiting The sudden emergence of a brand like Daniel Wellington could not have been possible without the aid of the web, bloggers, influencers, Instagram (apparently with nearly 1.5 million subscribers) and its monetisable “stars”.

There’s now a direct line from producer to consumer, which some-

times (but not always) proves effective. However, what is valid for these young startups, mostly headed up by young people with very close cultural and sociological connections with their targeted audiences, is not transposable as it is for established brands, whose audiences are more diverse and often older.

When all is said and done, watchmaking startups are forcing the ‘traditional’ brands, at least partly, to radically alter their modes of promotion and distribution. Brands that have patiently built up their physical distribution networks as vertical organisational structures, which are now increasingly integrated by means of direct subsidiaries and own-name store networks, are compelled to erect additional horizontal strategies adjacent thereto, in a bid to enter the web game, but at the risk of slipping under the millennials' radar.

But the results are often inconclusive (and even sometimes pitiful, such as the executive of a top established brand famously spotted using his smartphone to take pictures of his wristwatch for Instagram while posing every time he saw a nice car).

Stylistically, promotionally and commercially speaking, young watchmaking startups spawned by, and evolving around, the web have already profoundly transformed behaviour. So they are not to be dismissed. While this is not something to be “copied” (many of them, in fact, already occupy specialised segments), they do offer a valuable seismographic record of markets that are increasingly fragmenting into manifold niches.

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DISRUPTIONS

26 | WATCH AFICIONADO

CHANNELS

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The end of the “regular” retailer

Bucherer’s acquisition of Tourneau is the latest sign to date of a consolidation in distribution, a move towards becoming more powerful in negotiations with watchmaking brands due to the flurry of own-name stores and their new e-stores.

It looks like a number of small-but-innovative concept stores, run by genuine “curators”, have a rosy future ahead of them. However, retailers content with setting up shops-in-shops and ending up more like estate agents than watch professionals, have more to worry about...

Par Serge Maillard

Dozens upon dozens of watchmaking stores, all lined up, one after the other, all virtually identical...

Where might you be? Anywhere in the world! You could be in the Rue du Rhône in Geneva, Zurich’s Bahnhofstrasse, almost any street in downtown Hong Kong, the Dubai Mall, Miami’s Design District, or even Macao's luxury goods emporia.

Is this the future of watchmaking?

To a certain extent, yes, but increasingly less so... E-commerce will change the situation, given the masses of watchmaking brands having opened own-name stores over the last “golden” decade. There will always be the need to hit the shops, but a little less so in future (according to Bain, between now and 2025, around 75% of purchases will be made in real stores, and roughly 25% in virtual stores).

H

Get a backbone!

The question currently on everyone’s lips is not so much that of the brand store or brand e-store (whose numbers look set to fall), but of the future of independent watch retailers and distribution channels.

Under pressure from partners, themselves pressurised by a system wherein production exceeds actual consumption, leading to stock mountains, many have given up on what gave them their identity. They have gradually developed into mere showcases with rows and rows of display modules supplied by brands, with the inevitable loss of deals... and in the process they've abandoned their curatorship role.

What made a store such as Colette’s in Paris so successful? It's all about character! Can you imagine having, like it did, 80 USD watches selling

alongside models worth thousands of dollars? There are other examples of concept stores that share this uncompromising approach, such as Material Goods in New York. In other words, places where it’s genuinely the owner who dictates his or her choices.

They are in a minority... but it’s a minority that could be a winner in the long term. If a retailer decides to give in totally to its partners, what added value is left? Its network, of course...

However, collectors do not necessarily appreciate “dictated” choices, especially when they have growing access to information about the product and its price, and are turning increasingly towards vintage and e-commerce.

If the watchmaking industry were a little less inflexible, it might open the doors to more concept stores, in order to reach out in a different way to an exclusive, ultra-connected clientele. A clientele who no longer necessarily wish to set foot inside an ultra-classic store that's more or less identical to the one next door.

Critical size for survival What’s missing in watch distribution these days is therefore some backbone, or rather... a critical size in order to preserve identity and withstand the widespread standardisation. Players, such as Wempe, Les Ambassadeurs, Seddiqi or The Hour Glass (as well as other less wellknown operators, such as the recently profiled Relojeria Alemana in

withstood the crisis were not going to get carried away by the next trend, namely e-commerce. That trend is being fuelled by the increasing fascination among younger generations for buying pre-owned watches online from operators such as Chrono24 (see our interview in this feature).

The presence of Tourneau in the preowned market is therefore not without significance for Bucherer...

The Lucerne-based group has thus emerged as a new giant in the world watch market, one that demands respect, a go-to name, a retailer that can relate to its partners on an equal footing and even assert its own choices.

Mallorca) stand out size-wise, and they not only have a varied choice of brands, but also a few independent stars, which strike a chord with collectors.

It’s almost as if the brands featured in the SIHH Watchmakers’ Square had become the talking pieces of the true bestsellers in the rest of the watchmaking ecosystem. In fact, if we take a look at the time spent by collectors and journalists in this space, compared to the minor economic impact of those players, we become aware of their magnetic effect and of their concrete contribution to the entire ecosystem!

Yet, first and foremost, it is the takeover of the US watch dealer Tourneau by the Swiss Bucherer group this year, which gave the strongest indication that those retailers that had

“Planning bold moves” The question is whether to forge alliances or conduct acquisitions to get back into a “comfort zone” and increase one’s resilience, or introduce more draconian selection measures and show more consistency among the brands and models represented...

In this context, what role remains for the “average” retailer (still the more common category), who depends on a limited number of brands to dress his windows? And who lives in fear of an own-name store opening up nearby, or, what's worse, an e-store arriving on its territory?

Watchmaking has always displayed great passivity, and not all brands are threatened by extinction overnight... but they would do well to plan a few more bold moves, Swiss style, in the future!

The forced march towards digitisation

Sponsored content on Facebook, e-commerce websites, transparent watch prices, massive investment in SEO on Google – faced with the digital tidal wave that is sweeping everything before it, the brands are at a loss as to which way to go. They're all over the place at once, often forgetting to include one key player – the retailer.

The risks are as numerous as the opportunities.

By Serge Maillard

They are two “digital evangelists”.

These far-sighted web pioneers of the watchmaking industry have been pushing for digitisation in the industry for the past twenty years.

David Sadigh, founder of the digital agency DLG, and Arnaud Dufour, formerly IT head of e-services at Richemont and professor at

the University of Engineering and Management in the canton of Vaud, began their online activities in the watchmaking sector early on – a sector that, despite what we often hear, was an early web adopter, since the first watchmaking brand websites appeared from the mid-1990s.

“They were referred to as brochure sites to start with,” Arnaud Dufour recalls, “an expression that came to have

negative connotations. The idea was to present the company and its catalogue. It was no easy task at the time, because the internet was regarded as a highly technical tool, the diametrical opposite of the world of watchmaking with its luxury codes. What’s more, there were genuine technical constraints: with 256 colours and a slow connection, it was difficult to magnify the watches on the screen.”

Incompatibility between luxury watches and the internet At the time, the aesthetics of luxury were incompatible with a computer screen. This was the golden age of glossy magazines and the web was a poor rival!

For a long time, the watchmaking industry stagnated at the stage of simple digital experimentation. “What the managers feared about the internet was that they saw a lot of illicit players usurping their brand names and diverting their traffic via the search engines,” stresses David Sadigh. “It was really the law of the jungle, and that slowed down the digitisation process.”

The expert sees several reasons why the watchmaking industry did not go digital as rapidly as might have been imagined: “Even when consolidated into groups, the brands knew very little about the end customer. At the time, they felt that the retailers themselves should take charge and develop the approach to the customer.” And the unprecedented growth that the industry was posting in the 2000s was unlikely to make them change their strategy .

The iPhone, social media and e-commerce threesome For a long time, growth in the watchmaking industry was cut off from the technological leaps that were so radically changing the times. It continued to function through traditional distribution channels. But gradually, and in disorganised fashion, the industry followed its customers’ changing and increasingly internet-focused behaviour.

Because that was where the money was. The crumbling global economy, falling watch sales in China and the resulting crisis in the industry – a huge build-up of stocks right at a time when the brands had massively invested in their own sales boutiques – also brought about a

DISRUPTIONS change of direction towards digital platforms, with pressure coming from shareholders of groups listed on the stock exchange.

“The first real turning point came with the introduction of the iPhone a decade ago,” is David Sadigh’s analysis. “That was when the luxury brands noticed that their wealthy customers were massively adopting that quality interface.” The brands’ top managers themselves were avid converts to the smartphone: “The bosses realised it was easy to publish content on the internet. The impression up to then had been that it was reserved for geeks. It was a major psychological turning point.”

“What’s more, it triggered an organisational crisis among the IT and marketing teams of the watchmaking companies, because the top managers wanted to be able to consult the brand’s emails and website from their iPhones or iPads,” adds Arnaud Dufour. It was the start of a change of mindset among both the brands and their customers.

The growing social media bubble Another crucial factor, also helped along by the iPhone and digital mobility, was the emergence and rapid rise of social media to the point where today we are justified, after the initial digital bubble of the new millennium, in talking of a second “internet bubble”: that of social media. Media planning evolved as a result. Until then, the press had been the prime vector for communications in the luxury sector.

But beware of received ideas.

According to the WorldWatchReport published by DLG in 2017, the most effective online communications vector today, in terms of traffic generated on watch boutique sites, is neither Facebook nor Instagram nor Snapchat – but the good old newsletter! “Emailing may be less glamorous, but it’s still more effective,” underscores David Sadigh. “The fact that today everybody is addicted to Facebook and Instagram creates false perceptions.”

Transparent prices – no longer taboo?

A third turning point concerns e-commerce. “So the idea of communicating online became feasible,” emphasises Arnaud Dufour. “But the idea of selling over the internet, or even displaying prices online, was really taboo for a long time.” Yet there were categories of customer who were prepared to buy luxury watches, or at least conduct part of the purchasing process, online.

“Collectors bought or pre- bought watches over the internet, for example if a model wasn’t available in their geographical region. The psychological barriers were shattered.”

Notwithstanding this, the e-commerce revolution came “from the bottom up”, since – logically – it

WATCH AFICIONADO | 27

was the entry-level brands, most of them non-Swiss-made, that first began selling their products online. But the explosion of the preowned market and the emergence of new e-commerce giants, such as Chrono24 (Ed.: see our interview in this folio) were also game-changers.

A mixed bag of initiatives But let us qualify that remark. Not all the brands have switched to e-commerce, even if numerous announcements to that end have been made – one example is Omega’s investment in its sales platform in the United States last year. “For many players, the internet is first and foremost a communications tool,” Arnaud Dufour believes. “But it is by now accepted that the internet is part and parcel of the run-up to purchasing, even if most of the actual purchases take place in the ‘real world’. The major analysts are all anticipating that by 2025, 20-25 percent of sales transactions will be conducted online.”

Obviously, physical boutiques are as important as ever. But consumers

own boutiques all over the world.

A strategy born of their desire for “symmetry” – to control both production upstream (by acquiring suppliers) and distribution downstream (by opening their own sales outlets).

“This rollout also promoted the role of the internet,” David Sadigh believes. “The objective was to channel traffic into these new, expensively rented boutiques, which did not have the advantage of the historical networks of the local retailers.”

Indeed, since being “connected” is a real buzz word today, we should also underscore the brands’ desire to have a direct connection with their end customers. And the resulting bypassing of intermediaries. This development has called into question the brands’ historical partnerships with their retailers, both physical and digital.

An attitude that is more “destructive than constructive” “As far as retailer digitisation is concerned, we have to differentiate between two types of player,” David

The expert goes on: “If the watch brands really wanted to support their networks, they could! For example, they could suggest to a customer who lives near an authorised dealer to have the product delivered there. That would strengthen the bond with both the customer and the partner. But they don’t do it, as far as I know. Most of the time, the retailers are not integrated into the brands’ digital strategy. Instead, the brands tend to use digitisation so they can have their cake and eat it.”

Integrating digital strategies into discussions with retailers How can we change the game? “I argue in favour of shared ownership of customer data between a brand and the retailers, for example.

That would be a real strategic decision that can only come from the CEO. Such a joint customer database would be developed by both partners, for example by sending out joint newsletters. A genuine di-

“Most of the time, the retailers are not integrated into the brands’ digital strategy. Instead, the brands tend to use digitisation so they can have their cake and eat it.”

sibilities that too many brands seem to be shooting in all directions at once, investing a little (or a lot) in everything, rather than concentrating on one, clear-cut, digital strategy. A bit like a headless chicken that goes zigzagging in all directions.

And they are not all shooting together: “All the brands are stepping up their digitisation, but not all at the same pace,” underscores David Sadigh. “It often happens that the large budgets allocated specifically to digitisation are not used optimally. The problems most frequently encountered are related to the purchase of key words that cannibalise organic traffic, advertising banners that generate low-quality traffic, or too much energy poured into the social media.”

Social media: all vanity?

David Sadigh

get their information online and purchase in boutiques, or vice-versa. Hybridisation is the order of the day, known in marketing-speak as “omnicality”.

Arnaud Dufour: “There are still some big players who haven’t crossed over to e-commerce. Rolex is one emblematic example, even if the fact that it displays recommended sales prices on its site shows that it’s evolving. If those players started selling online, figures would shoot up.”

Retailers left out in the cold But what hurts is how the distribution networks have been left out of the brands’ digital projects.

Since the mid-2000s, the watchmaking groups – especially the Richemont Group brands, but also players like Omega, part of the Swatch Group – have opened a jaw-dropping number of their

Arnaud Dufour

Sadigh believes. “First of all, you have retailers with a very local customer base, often going back several generations and with limited means. For them it’s difficult to find the budget or develop online expertise. Then you get the larger retail chains, who have more chance of launching online initiatives with the support of the brands. Both are being confronted with new kinds of customer behaviour, heavily influenced by digitisation.”

Arnaud Dufour points the finger at an attitude on the part of the brands that is more destructive than constructive for their retailers: “It would be a good thing if the brands finally assumed their responsibility for their historical distribution network in relation to the internet.

Given the way e-commerce has developed in the case of quite a few brands, you can’t deny that the business decisions they took were not to the advantage of the retailers. Yet they’re supposed to be partners.”

gital strategy that includes the retailers would reassure them.”

Because numerous prospects are opening up: “Customer data management software is really in its infancy,” is Arnaud Dufour’s analysis. “The same goes for online after-sales service. The idea of virtual communities or clubs turned out to be a damp squib. Everything needs to be done from scratch. So why not include the retailers in these processes?”

Like a headless chicken...

But should the brands invest first in renovating their websites? Or promoting their social media? Or launching an online boutique? The sheer number of options makes your head spin! Ultimately, you get the impression that the brands are exploring any number of paths, at a loss what to do faced with so many online tools. There are so many pos-

While social media are very worthwhile showcases, the specialist says he often observes that the brands are ignorant of the real profile of the followers on Instagram.

They rush to attract fans without any kind of in-depth reflection about how to convert fandom into sales, by redirecting fans to the retailers, for example. “One typical trap that the brands fall into is to rush about in every direction and give priority to quantitative results without having established a clear strategy and targets beforehand.”

Whatever strategy they choose demands serious investment, stresses Arnaud Dufour: “We’ve been living with the false assumption that the internet is free. But an e-boutique is expensive to set up and run. Even if its cost structure and the economies of scale it allows are peculiar to it, just like any physical boutique it demands qualified staff, stocks, tools and a push for visibility.”

For him, the brands’ forced march – reluctant and tentative – towards digitisation is still being undermined by a fundamental fear anchored in some corner of their managers’ brains: fear for the very survival of the classic wristwatch with the advent of the smartwatch. “And they’re right to be wary, because as far as applications for smartwatches are concerned, we ain’t seen nothing yet.” Even if the market still appears to be segmented (see our interview in this folio), this fear of a loss of identity has generated a profound distrust, conscious or subconscious, of the tidal wave of digitisation that seems to be sweeping all before it.

DISRUPTIONS

28 | WATCH AFICIONADO

LABS

Watchmaking and science: origami, nanotubes and capsules L

Mechanical watches are currently accurate enough to satisfy our everyday needs for precision. Their appeal lies elsewhere.

Innovation is not so much a matter of necessity as of possibilities. Because thanks to laboratory research, the Huygensian age could now be over – and a new, lucrative era opening up.

By Pierre & Serge Maillard

Technologically obsolete, the art of watchmaking continues largely thanks to the appeal of its ingenious exploits. But even doubling, tripling, or quadrupling tourbillons is becoming old hat. Audiences are getting bored. In the seventeenth and eighteenth centuries, watchmaking marched in the vanguard of science; it was a tool for basic research into navigation, astronomy, ballistics and chemistry, to name just some examples. But what if mechanical watchmaking – based on a whole new kind of mechanism – returned to the forefront of science?

Research conducted in recent years is now resulting in actual products

The Zenith Defy Lab monolithic regulator

which brilliantly demonstrate that mechanisms are not dead by a long chalk – and that a complete renaissance is possible.

Scientific watchmaking in the 21st century The leads being pursued in this renaissance are many and varied: at HYT, they take the form of liquids and capsules, at Zenith, carbon nanotube balance springs and a new, monolithic regulator. Greubel Forsey is conducting advanced research into nanotechnology, while Dominique Renaud is focusing on micro-pivots

and blades. And those are just some examples, because other brands have also begun research into regulators.

Besides these, new, ‘compliant’ forms of mechanism, together with origami mechanisms, are opening up truly new prospects, although these have so far been confined largely to the laboratory. But combined with advances in robotics, they could well be ushering in mechanisms so radically different that it is hard to predict how mechanical watches will look in ten years’ time. If they still exist at all.

The regulator revolution: Zenith Defy Lab Yet most of the research which is attaining actual implementation today in the shape of marketed products covers the actual regulator and not the power supply, which remains largely traditional – a barrel and wheel train. This is the case of the Zenith Defy Lab, or at Dominique Renaud, for example.

With the totally innovative oscillator of the Zenith Defy Lab, Guy

Sémon and his multidisciplinary teams at LVMH have chalked up a major advance by successfully combining the 31 or so parts of a conventional regulating organ into one single, monolithic component in monocrystalline silicon, 0.5 mm thick. No need for assembly, adjustment or lubrication. It uses considerably less power and is virtually unaffected by incidental variations in power and position.

It is accurate to around 0.3 seconds a day and this remains consistent during 95% of its power reserve.

Moreover, this oscillator is unaffected by gravity, magnetism and temperature.

The regulator revolution: the DR-01 from Dominique Renaud The regulator solution put forward

by Dominique Renaud with his recently unveiled DR-01 is quite different, but also opens up interesting prospects. A microscopic, unbreakable ‘spatial pivot’ supports a heavy

‘balance’ with high inertia, the balance spring being replaced by a ‘spatially pivoting blade resonator’.

Razor-sharp blades mounted on notched, spherical rubies vibrate synchronously with one another with minimum friction and, consequently, a power loss virtually equivalent to nil. The crossbow-shaped resonator spring that holds the sharpened blades in place assumes the role of balance spring.

The balance, twenty times heavier than a traditional balance, rotates freely, driven by a single-impulse detent-type escapement system, called ‘lost beat’. This escapement is such that for one impulse, there are 9 lost beats. Which means that it is capable of vibrating at extremely high frequencies.

This ensemble – the unbreakable micro-pivot, spatially pivoting blade resonator and detent-type lost-beat escapement – represents numerous advances and can genuinely be described as revolutionary. With a total amplitude of 340 degrees between each impulse and a record frequency that can ‘easily attain’ 12Hz (84,600 vibrations/h), its very low power consumption, ‘unprecedented’ power reserve (we’re talking of weeks) and

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WATCH AFICIONADO | 29

Greubel Forsey Mechanical Nano Foudroyante

its superlative chronometric performance, the DR-01 Twelve First really is opening a whole new chapter in the history of watchmaking.

Or even a whole new book. Because Dominique Renaud’s ambition over the next few years is to present twelve different prototypes of the DR that will shake the very foundations of mechanical watchmaking, which were thought to be immutable.

The nano era: Greubel Forsey As for Robert Greubel and Stephen Forsey, they are exploring the astonishing possibilities of nano-mechanisms. At the 2018 SIHH, the duo showcased a fully implemented prototype of their Nano Foudroyante EWT. This nano-foudroyante consumes 1,800 times less power than a ‘normal’ foudroyante, and the space this nano-complication occupies has been reduced by 96%!

“Saving that much power and space opens up whole new vistas,” explains Stephen Forsey. “By saving that much power, we can achieve power reserves of up to 180 days, at this stage in our research, with a normal-sized barrel. What’s more, we can use the energy produced by internal air turbulence – in other words, put draughts to practical use.

That means that a propulsion wheel can work with 20 nano-newtons of

energy, 100,000 less than the power it takes to drive an escape wheel.”

Contrary to what you might imagine, working at the nanometric level (there are one billion nanometres to one metre) does not mean working with the same components in miniature. Far from being a micrometric ‘reproduction’, passing from the one-tenth or one-thousandth scale to the one-billionth scale allows you to completely redesign a movement’s energy and space distribution.

The space this frees up – huge, the size of a watch movement – means you can start imagining functions as yet unheard-of. So – what kind of functions? “This space is just opening up and it’s forcing us to think about what we’re going to do with it,” replies Stephen Forsey.

“We’ve already placed a frequency indicator in it, but what else? It opens up unprecedented prospects for creativity and functionality.”

LVMH is going for folding mechanisms But that’s not all. The mechanisms of the future still have plenty of surprises in store. The scientific research done by Guy Sémon at LVMH led him to explore ‘compliant’ mechanisms. This new mechanical theory is used in robotics, particularly, to conduct tasks that require very

subtle amounts of force. It sets new premises and creates new associations no longer based solely on the interaction of different, rigid parts, but made possible by the use of flexible materials.

It is this new theory that has allowed an assembly of different fixed or mobile parts to be replaced by one monolithic structure.

Compliant mechanics open up the possibilities of designing origami mechanisms capable of folding and unfolding. Still the reserve of robotics research for the moment, it has already resulted in the design of mini-robots that are able to change shape autonomously. From there it’s just one step – yet to be taken – to completely new kinds of watchmaking mechanisms, for example in the shape of a ‘flower’ that opens and closes.

Liquids and capsules at HYT And what if innovations in watchmaking could benefit other sectors, such as the medical industry, where the issue is less about mastering time and more about mastering life itself? This is increasingly evident every year at that grand rallying point of watchmaking suppliers, the EPHJ trade fair in Geneva, where financially challenged microtechnology specialists seek to gain a

"Nano technologies opens up unprecedented prospects for creativity and functionality.”

foothold in the lucrative medtech sector, of which Switzerland is also a global hub. Don’t forget that it was here, for example, that the first stents were developed, in Zurich and Lausanne in the late 1970s, and that today, Switzerland is home to giants of the medical sector such as Sonova, Ypsomed, Straumann, Johnson & Johnson Medical, Biotronik and Medtronic.

It is into this rich ecosystem that Preciflex intends to diversify.

Preciflex is the sister company of watchmaker HYT, which is renowned for its watches in which coloured liquids show the time instead of the traditional hands – thereby putting a whole new perspective on the passage of time, with an intuitive vision of past and future.

In reality, today HYT is acting as a showcase or ‘pilot fish’ for the future possibilities of Preciflex.

Might the applications currently used in watches, which are all about mastering the precise movement of tiny amounts of liquid (microlitres) on living bodies and thus inevitably subject to huge constraints (tempera-

ture, shocks, etc.), tomorrow be used in the human body for medical purposes? It is plain, though, that standards in the medical sector will be far more stringent than in watchmaking.

Two years ago, this small conglomerate raised funds of more than 20 million dollars. One of the investors was a certain Peter Brabeck, formerly CEO of Nestlé, who had already very strongly geared that giant towards the health industry.

The strategic issues underlying these innovations Looking beyond the scientific and technological adventure, the issues underlying these new mechanisms are also strategic, as they afford complete autonomy to the players engaged in developing them.

The development of balance springs made from carbon nanotubes, again

by Guy Sémon and his team, are a cogent demonstration of this. Having passed virtually under the radar, this astonishing development – ‘growing’ nanotubes to make balance springs is a world premiere – is set to make LVMH independent in the strategic sector of balance springs, until now largely dominated by Nivarox-FAR of the Swatch Group.

Science is a precious ally in the ‘wars’ of competition.

INTERVIEW

30 | WATCH AFICIONADO

“Strengthening the appeal of G-Shock for mature buyers” G-Shock is 35 years old in 2018. Among the most striking anniversary models that Casio has launched this year are the Red Out, the Gold Tornado, the Big Bang Black and the partnerships with artist Eric Haze, fashion designer NIGO and fashion brands Pigalle and Sankuanz.

We interviewed Shigenori Itoh, Casio’s senior executive managing officer and senior general manager of global marketing, who has led worldwide sales operations for all products since 2016.

Interview by Serge Maillard

What are the main goals of your anniversary celebration?

One of them is to reach out to younger generations, as we always create our watches taking into consideration the latest world trends. Like music, sports and fashion, our creations continue to appeal to youth culture.

Younger buyers can obtain some of our watches at an affordable price.

Also, more and more, they get their information through word of mouth on social media. We have to be present on these platforms.

Beyond the younger generations, one of your goals is also to push forward the Premium G-Shock models. How far along are you with this strategy today, and how do you intend to implement it?

Indeed, for 35 years, G-Shock has always grown in line with the younger generation. But our original fans have also grown up and become adults, just like our brand! Our mission now is to strengthen the appeal of our watches with mature buyers. And also with people who are not yet owners of a G-Shock.

We will achieve this by promoting our higher-end product ranges.

There has been a strong vintage trend these last few years, with younger generations looking for products from the 1960s, the 1970s and the 1980s. How do you integrate this trend into your strategy?

Shigenori Itoh

“Today, most smartwatches are produced by companies active in the smartphone market. Looking at their products, we do not see a clear use or application.”

Our contribution to the watch market has always been to create timepieces that become “essential” in any given period of our history. We see differences by geographic area, but it is true that young people are attracted by vintage models. Thus I am already in the process of organising the revival of timepieces in a more contemporary style.

At the same time, we see a lot of smartwatches on the wrists of younger urban populations. What

is your strategy relative to the connection with the G-Shock?

Today, most smartwatches are produced by companies active in the smartphone market. Looking at their products, we do not see a clear use or application. We do produce smartwatches at Casio, but these are really focused on outdoor applications, with a real use benefit for the buyer.

A look into the future… Where do you see the G-Shock in 35 years,

in 2053? What will it look like?

G-Shock is the strongest and most famous brand among Casio’s ranges of timepieces. One important policy consists in strengthening the unique identity of the G-Shock brand.

Another aims at continually increasing the functionality of our models, in the Casio spirit, which will eventually benefit the whole watch ecosystem. And speaking personally, I hope that we will see a G-Shock used in space in the future!

| CHAIRMAN Philippe Maillard PUBLISHER Serge Maillard EDITOR-IN-CHIEF Pierre Maillard CONCEPTION & DESIGN Serge Maillard, Pierre Maillard, Alexis Sgouridis DIGITAL EDITOR Ashkhen Longet PUBLISHING / MARKETING / CIRCULATION Nathalie Glattfelder, Marianne Bechtel/Bab-Consulting, Jocelyne Bailly, Véronique Zorzi BUSINESS MANAGER Catherine Giloux MAGAZINES Europa Star Global | USA | China | Première (Switzerland) | Bulletin d’informations | Eurotec EUROPA STAR HBM SA Route des Acacias 25, CH-1227 Geneva - Switzerland, Tel +41 22 307 78 37, Fax +41 22 300 37 48, contact@europastar.com Copyright 2018 EUROPA STAR | All rights reserved. No part of this publication may be reproduced in any form without the written permission of Europa Star HBM SA Geneva.

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